TechFaith Reports Fourth Quarter and Full Year 2013 Financial Results

    TechFaith Reports Fourth Quarter and Full Year 2013 Financial Results  PR Newswire  BEIJING, March 12, 2014  BEIJING, March 12, 2014 /PRNewswire/ -- China TechFaith Wireless Communication Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today announced its unaudited financial results for the fourth quarter and the full year ended December 31, 2013.  For the fourth quarter of 2013, TechFaith reported total net revenues of US$31.2 million compared to US$29.9 million in the third quarter of 2013. Gross profit for the fourth quarter of 2013 was US$4.0 million compared to US$4.9 million in the third quarter of 2013. Gross margin for the fourth quarter was 12.9% compared to 16.3% in the previous quarter, primarily reflecting business mix. Operating expenses for the fourth quarter of 2013 increased to US$8.8 million compared to US$4.7 million for the third quarter of 2013, primarily due to the impairment of long-lived assets in the amount of US$3.1 million and the impairment of goodwill in the amount of US$1.2 million in the fourth quarter of 2013. Net loss attributed to TechFaith for the fourth quarter of 2013 was US$2.1 million or US$0.0390 per basic and diluted weighted average outstanding ADS compared to net income of US$0.3 million or US$0.0049 per basic and diluted weighted average outstanding ADS in the third quarter of 2013.  For the full year ended December 31, 2013, TechFaith reported total net revenues of US$119.5 million compared to US$137.7 million for the full year ended December 31, 2012, primarily due to declines in revenues from the Company's gaming business and its branded phone business. Gross profit for the full year 2013 was US$16.8 million, compared to US$31.3 million for the full year 2012. Gross margin for the full year 2013 was 14.1%, compared to 22.7% for the full year 2012. Operating expenses for the full year 2013 was US$22.0 million compared to US$31.1 million for the full year 2012. Net loss attributed to TechFaith for full year 2013 was US$2.5 million or US$0.0467 per basic and diluted weighted average outstanding ADS, compared to a net loss of US$3.3 million or US$0.0622 per basic and diluted weighted average outstanding ADS for the full year 2012.  Miss Ouyang Yuping, TechFaith's Chief Financial Officer, said, "2013 was another very challenging year. Our business continued to be negatively impacted by competition in the mobile phone markets we serve, and continually changing customer demands in the gaming business. Given this difficult environment, we focused on strict operating controls to help us weather the market volatility, reducing operating expenses by 29.2% for the full year 2013 compared to the full year 2012. Importantly, we exited 2013 with a balance of cash and cash equivalents of US$265.6 million. Our balance sheet continues to give us the ability to pursue the long-term business initiatives and strategies that are central to our Company's success, including the ongoing development of our real estate portfolio, even with higher levels of competition and the continuing market volatility in mobile and gaming businesses."  Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said, "While the market environment remains very challenging and difficult to forecast, our focus is on working with existing customers to develop potential opportunities in both China and in the markets we serve worldwide. We do not expect to see the business conditions materially improve over the near-term. That said, we are seeing some positive movement in our mobile phone business, which depending on the timing of customers' orders could potentially become revenue generating for TechFaith later this year. The opportunities we are focused on are those where TechFaith has competitive advantages: lower volume, higher feature value content, and tailored design offerings. This encompasses our popular ruggedized lines, as well those catering to the certain sports and healthcare needs. We will continue to develop and launch more ruggedized and tailored models to satisfy the demands of both domestic and international clients, as well as enterprise solutions targeting specific industries."  Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "We continued to focus on our core areas of offering high level ruggedized mobile phones throughout 2013. In addition, we have also expanded into different ruggedized products categories such as 'Extreme Digital Camera,' 'Extreme Smart Watches' and 'Ultimate Smart Headphones'. This has allowed us to support customers with complex and unique needs that larger handset companies were not suited to provide. We have taken an even more cautious approach over the past year to ensure our long-term success. Our focus remains on creating long-term value for both TechFaith and our shareholders. In-line with this view, we have maintained a strong balance sheet and not pursued dilutive acquisitions that would only serve as costly distractions. Instead, we made further progress on the development of our High-Tech Park campus. In Hangzhou, two buildings have been completed. In Beijing 16 buildings are on track to be completed by the fourth quarter of 2014. Overall, we expect that the above positive catalysts in our business will ultimately lead to the creation of value for both TechFaith and our shareholders."  First Quarter of 2014 Outlook  TechFaith currently expects its total revenues for the first quarter of 2014 to be in the range of US$28.0 million to US$30.0 million. The forecast represents TechFaith's current and preliminary view, which is subject to change.  Investor Conference Call / Webcast Details  TechFaith will hold a conference call on Wednesday, March 12, 2014 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Wednesday, March 12, 2014 in Beijing) using dial-in +1-617-213-8061 or +1-866-825-3209. The conference call passcode is 27625464. A live webcast of the conference call will also be available on TechFaith's website at www.techfaithwireless.com.  A replay of the call will be available approximately 2 hours after the conclusion of the live call by telephone at +1-617-801-6888, with passcode 49110768. A webcast replay will also be available at www.techfaithwireless.com.  About TechFaith  TechFaith (NASDAQ: CNTF) has three primary businesses. The Company is a leading global mobile solutions provider for the global mobile handsets market (previously called the ODP (Original Developed Product) business). The Company is a leading developer of specialized mobile phones for differentiated market segments, including the rapidly growing smartphone market targeting wireless mobile phone network operators and end users; the Company also serves sports enthusiasts with a tailored line under the Jungle brand and the teen market under licensed brands. Under the Company's MobiFox brand (previously "17VEE" and "17FOX"), the Company has built a leading intellectual property based motion gaming business ranging from Bluetooth-enabled motion gaming controllers and software to a planned proprietary set-top motion game box. For more information, please visit www.techfaithwireless.com.  Safe Harbor Statement  This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident," "outlook" and similar statements. Among other things, the outlook for the first quarter 2014, the business outlook and strategic and operational plans of TechFaith and management quotations contain forward-looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, those risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. TechFaith does not undertake any obligation to update any forward-looking statement, except as required under applicable law.    CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of U.S. Dollars, except share and per share/ADS data and unless otherwise stated)                                    ThreeMonthsEnded  Three Months Ended       Twelve Months Ended                                    September 30,       December 31,             December 31,                                    2013                2013        2012         2013        2012 Revenues: ODP                                $21,321             $23,680     $12,077      $79,661     $57,803                                     8,096               5,414       11,617       32,203      50,266 Brand name phone sales Game                               486                 2,112       7,338        7,643       29,594 Total net revenues                 $29,903             $31,206     $31,032      $119,507    $137,663 Cost of revenues: ODP                                $18,280             $20,493     $10,577      $70,989     $53,971                                     6,384               4,698       8,940        25,374      34,250 Brand name phone sales Game                               373                 1,992       5,577        6,307       18,146 Total cost of revenues             $25,037             $27,183     $25,094      $102,670    $106,367 Gross Profit                       $4,866              $4,023      $5,938       $16,837     $31,296 Operating expenses: General and administrative         $1,193              $1,660      $1,957       $6,322      $5,594 Research and development           2,334               2,222       2,010        8,285       9,343 Selling and marketing              684                 547         801          2,535       12,328 Impairment of long-lived assets    515                 3,110       3,131        3,625       3,833 Impairment of goodwill             -                   1,242       -            1,242       - Total operating expenses           $4,726              $8,781      $7,899       $22,009     $31,098 Government subsidy income          84                  84          44           357         232 Other operating income             580                 960         475          2,121       1,124 Income (loss) from operations      $804                $(3,714)    $(1,442)     $(2,694)    $1,554 Interest expenses                  (36)                (78)        -            (115)       - Interest income                    456                 462         428          1,888       2,032 Other income                       13                  229         663          246         354 Change in fair value of put option (60)                (30)        (60)         (150)       (150) Income(loss) before income taxes   $1,177              $(3,131)    $(411)       $(825)      $3,790 Income tax (expenses) benefits     (1,106)             891         (2,147)      (2,146)     (5,635) Net income (loss)                  $71                 $(2,240)    $(2,558)     $(2,971)    $(1,845) Less: net (loss) income attributabletothenoncontrolling (187)               (176)       485          (501)       1,449 interest Net income (loss) attributable to  $258                $(2,064)    $(3,043)     $(2,470)    $(3,294) TechFaith Net income (loss) attributable to TechFaith per share  Basic                            $0.00               $(0.00)     $(0.00)      $(0.00)     $(0.00)  Diluted                          $0.00               $(0.00)     $(0.00)      $(0.00)     $(0.00) Net income (loss) attribute to TechFaith per ADS  Basic                            $0.00               $(0.04)     $(0.06)      $(0.05)     $(0.06)  Diluted                          $0.00               $(0.04)     $(0.06)      $(0.05)     $(0.06) Net income (loss)                  $71                 $(2,240)    $(2,558)     $(2,971)    $(1,845) Other comprehensive income, net of tax Foreign currency translation       978                 3,908       2,894        9,892       3,525 adjustment Comprehensive income               1,049               1,668       336          6,921       1,680 Less: Comprehensive (loss) income attributable to noncontrolling     (72)                192         706          372         1,749 interest Comprehensive income (loss)        $1,121              $1,476      $(370)       $6,549      $(69) attributable to TechFaith Weighted average shares outstanding  Basic                            794,003,193         794,003,193 794,003,193  794,003,193 794,003,193  Diluted                          794,003,193         794,003,193 794,003,193  794,003,193 794,003,193    CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands of U.S. Dollars)                                     December31,  September30,  December31,                                     2013          2013           2012 Assets Current assets: Cash and cash equivalents           $265,649      $267,024       $257,950 Accounts receivable, net of allowances of $543, $7,607 and $7,796 as of December 31, 2013,     17,100        25,156         8,666 September 30, 2013 and December 31, 2012, respectively Notes receivable                    58            33             - Inventories, net                    13,576        7,681          7,490 Prepaid expenses and other current  10,436        8,394          15,678 assets Total current assets                $306,819      $308,288       $289,784 Property, plant and equipment, net  $94,282       $88,249        $80,614 Land use rights, net                10,729        10,669         10,645 Acquired intangible assets, net     2,798         4,863          4,061 Goodwill                            -             1,242          1,242 Total assets                        $414,628      $413,311       $386,346 Liabilities and shareholders' equity Current liabilities: Accounts payable (including accounts payable of the consolidated variable interest entity without recourse to China Techfaith Wireless Communication    14,247        19,795         11,140 Technology Limited, $nil, $nil and $nil as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Short-term loan (including short-term loan of the consolidated variable interest entity without recourse to China Techfaith Wireless Communication Technology   15,350        15,350         15,350 Limited, $nil, $nil and $nil as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Accrued expenses and other current liabilities(including accrued expenses and other current liabilities of the consolidated variable interest entity without recourse to China Techfaith         21,302        16,207         11,784 Wireless Communication Technology Limited, $189, $187 and $184 as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Advance from customers(including advance from customers of the consolidated variable interest entity without recourse to China Techfaith Wireless Communication    9,525         9,602          9,173 Technology Limited, $nil, $nil and $nil as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Deferred revenue(including deferred revenue of the consolidated variable interest entity without recourse to China Techfaith Wireless Communication Technology   3,854         2,756          4,178 Limited, $nil, $nil and $nil as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Income tax payable (including income tax payable of consolidated variable interest entity without recourse to China Techfaith Wireless Communication Technology   254           1,606          1,062 Limited, $22, $22 and $21 as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Put option liability (including income tax payable of consolidated variable interest entity without recourse to China Techfaith Wireless Communication Technology   1,830         1,800          1,680 Limited, $nil, $nil and $nil as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Total current liabilities           $66,362       $67,116        $54,367 Long-term loan (including income tax payable of consolidated variable interest entity without recourse to China Techfaith Wireless Communication Technology   290           290            290 Limited, $nil, $nil and $nil as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Total liabilities                   $66,652       $67,406        $54,657 Shareholders' equity Ordinary shares of par value $0.00002: (50,000,000,000,000 shares authorized; shares issued and outstanding, 794,003,193,           $16           $16            $16 794,003,193 and 794,003,193, as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively) Additional paid-in capital          144,083       143,680        142,837 Accumulated other comprehensive     55,841        52,301         46,822 income Statutory reserve                   23,730        23,137         23,137 Retained earnings                   90,409        93,066         93,472 Total Techfaith shareholders'       $314,079      $312,200       $306,284 equity Noncontrolling interest             $33,897       $33,705        $25,405 Total shareholders' equity          $347,976      $345,905       $331,689 Total liabilities and shareholders' $414,628      $413,311       $386,346 equity    SOURCE China TechFaith Wireless Technology Limited  Website: http://www.techfaithwireless.com Contact: China Techfaith Wireless Communication Technology Limited, Jay Ji, +86-10-5822-8390, ir@techfaith.cn or Global IR Partners, David Pasquale, +1-914-337-8801, cntf@globalirpartners.com  
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